Skytree Looms in Big Data Forest with New Funding

Big data has become one of tech’s biggest buzz phrases, despite varying definitions about what it really is. But the financial bets being placed are pretty substantial, with Skytree emerging as the latest example.

The Silicon Valley startup on Tuesday is announcing it has raised $18 million in Series A funding, a fairly hefty amount these days for an early-stage software company with less than 20 employees. U.S. Venture Partners, a venerable name in the venture-capital world, led the round. Scott McNealy, the former chief executive of Sun Microsystems, is also participating.

Skytree, which was founded in 2011 and came out of stealth mode the next year, is one of the startups specializing in the big-data specialty known as machine learning. Instead of, say, trying to sift through large amounts of data to find specific facts, machine learning is usually used to make predictions based on analyzing huge quantities of data.

Rather than being explicitly programmed to carry out tasks, machine learning systems often exploit a variety of algorithms and are exposed to sets of data that help train them for specific purposes.

Martin Hack, Skytree’s co-founder and CEO, says a classic use case is trying to predict whether people are good credit risks by examining vast quantities of records about other people and how they behave. The more data that can be analyzed efficiently, he says, the more accurate the predictions are.

“The guy who has better accuracy will beat the other guy in the market,” Hack says.

Not that companies weren’t doing this sort of thing before Skytree came along. Well-heeled financial services firms and companies like Google hire scientists to help come up with algorithms that they keep proprietary.

What was lacking, Hack says, was a machine-learning platform that companies without such internal expertise could exploit. The Skytree Server, as the company calls its software, runs on commodity computers in data centers and is being used by financial-service companies and others that range from the eHarmony dating service to the United States Golf Association.

Besides some recognizable names as customers, Skytree likes to point to an advisory board made up of four well-known professors–James Demmel, David Patterson and Michael Jordan from the University of California at Berkeley, and Pat Hanrahan from Stanford University.

Though the company’s headcount is small now, Hack expects the total to grow in view of the new funding and customer adoption. “We should have 40 to 50 by the end of the year,” he says.

McNealy has been working heavily with the Denver-based startup Wayin, where he is chairman, since leaving Sun after its purchase by Oracle. He says Skytree’s software reminded him somewhat of a compiler program that Sun once developed that adjusted in real time to the “hot spots” it detected that indicate what parts of a system were being taxed the most.

At Skytree, “the strategy is to be a little more predictive and learn when the data is coming in,” McNealy says. “I liked the direction.”

Note: An earlier version of this item incorrectly stated that James Demmel works at Stanford.